Wednesday, July 15, 2009

Petrol Price War Heats Up Between Coles And Woolworths/Safeway

SHOPPERS at Coles and Woolworths/Safeway supermarkets are set to benefit from huge savings at the petrol pump, with both companies today announcing discounts for customers spending between $100 and $300 in their stores.

Coles was the first to begin advertising its offer, with offers of discounts of between 10c to 40c a litre at the company’s service stations for customers spending between $100 and $300 at its supermarkets.

Woolworths stores in Victoria launched a similar offer yesterday, giving customers 10c a litre off for spending $100 at its stores, 25c off for spending $200 and 40c off for a spend over $300. The discounts end at midnight on Wednesday.


Woolworths spokesman Benedict Brook warned that the deal may not last long, due to the size of the savings, and that customers should look to capitalise on the savings as soon as possible.

“Price cuts of this magnitude are not sustainable for long periods of time, but with people under the pump with the economy the way it is more one offs are likely in the future,” Mr Brook told News Ltd.

The offerings have come under fire in Canberra, with Independent Senator Nick Xenophon describing the discounts as an example of the “obscene” power that petrol retailers and oil companies wield in determining regular non-discounted fuel prices.

Victoria’s automotive industry body the VACC has also weighed in on the petrol promotion issue, saying that the supermarket retailers’ latest petrol discount offer will ultimately lead to the death of many independent fuel stations.

“While shoppers take advantage of the scheme, Independent Service Station and Convenience Store operators are feeling the knock-on effects,” said VACC Executive Director David Purchase.

“They cannot match a Coles or Woolworths offer as they do not have the thousands of items on their shelves to absorb the cost.

“Independent retailers, who are already battling to exist, are losing customers in droves.”

Mr Purchase also questioned the timing of the promotion:

“Oil prices have not risen dramatically, vehicle sales - while down on last year - are still healthy, petrol prices are at a reasonable level; so why discount heavily now?” He said.

“What is the purpose of selling petrol at below cost?”

Mr Purchase also called on the Australia’s consumer watchdog the ACCC to investigate the fuel discounts offered by Woolworths and Coles to determine if there is any behind-the-scenes collusion.

“The ACCC must immediately review its decision to allow the major grocers discount docket scheme and examine the motives and supposed benefits of Coles’ and Woolworths’ latest promotion,” he said.